FLO - Earnings call transcript Q3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and thank you for standing by. Welcome to the Flower Foods Third Quarter 2024 Results Conference Call. Please be advised that today's event is being recorded.

I would now like to hand the conference over to your opening speaker today, J.T. Rieck, Executive Vice President of Finance and Investor Relations. ahead. go Please

J. Rieck

on and audio opportunity Josh, our I everyone will posted hope remarks today's website. Thank session, of Q&A review good this our the we earlier presentation slide to view post to Investor earnings had Relations and After an you, also the morning. our replay release, prepared listen call.

Q&A forward-looking statements company's performance. Please make note about may that session, we in this the

could statements these risks to be actual are materially. they differ to that believe reasonable, and subject uncertainties we cause to results Although

In addition important our Foods fully to what in these in you business factors remarks, hear SEC detailed Flowers relating filings. to are

presentation We which earnings on disclosure also in for the the financial release provided provide measures and and reconciliations slide end our non-GAAP website. are at the of

and you. I'll Steve McMullian, today our Kinsey, me Ryals, to Ryals are turn Joining over CEO; and it Chairman CFO.

A. McMullian

with We're pretty brands to what everybody. continues quite morning, Good strong pleased leading our performance in environment. a of be the challenging

behavior, sales in we that drove category value-seeking our pricing portfolio segment, And drove largest the execution our While sales growth losses. In more category, volume strong enabled breads. of dollars gains which differentiation. offset share did and in strategy investments validates packaged that growth consumers Other pressured as the units fresh in initiatives our grow than

with on to financial out long-term focused of look shareholder enhancing ahead results our remain the close we value, consistent we and to As year and targets. XXXX, look course, delivering

and our can savings by in retail, private branded That away-from-home label our process opportunities growth executing of cost includes targeting margining pockets that on maximizing areas businesses control our plan. in up we and

questions. up open So Josh, we'll with the floor that, for

Operator

Steve Deutsche Bank. comes Our Powers Instructions] first question from [Operator with

Stephen Robert Powers

and could the think of actually Wonder. we as Bites both year, hoping we areas Dave's with Snack was I about next expansion start

on obviously little some bit you're bit the the a around guess of the a more sense of of of -- little you're placement expansions of -- going and pressure little a And baked the scale guess, that expecting? the bites goods bit at confidence signs is your we're of faced little for just you in ramp which those where I detail on give sweet sort get has late Wonder I side, Just just and a not for -- haven't overextending that Dave more those and you confidence on detail snack think category, question? to side, the brand, risk

A. McMullian

Yes, of course.

you that We of NACS ] the from line. rolling have returns we're early for retailers. lot can show few that We Let more There's noted me it we'll in been details good. weeks a on at item should probably the enthusiasm XX the a Wonder to very you early customers. top out start mean, I February. back. [ with have I the quite -- just been in tell

in has So goods the -- we items need the late. but not a with we mean quality that's performed good we category are I baked The sweet category. of -- The the some honestly, And we all line in unique. the is help been not packaging kind have fantastic. down story. know category,

for about a And very growth Wonder I some and unaided into inject Wonder. that is the steps proactive the that quite to we're just given so we brand are important taking think excited category, it takeaway high doing awareness with

overextending. and bites the we early beyond bars, I then continue of if differentiated mean year. did important. visibility on then, the as as more the with think space were And in that. SKUs X, snack quite are you mentioned, danger the shelf course, snack it that a probably out don't well, the analogous, line, you have say, products Most do to some the there. then, unique completely In the we next gate the nothing protein example, pipeline anything, There's so now to the original as shelf. the take that bites course, of we're like in to well. but category and the out would you And Steve, I for I deliver of and if X of well, DKB the are really category. out quite different quite as And terms innovation bars, granola is X from for in borrowers of expanding on of and SKU snack see

But it that, suite But these burgeoning time. build with this ramp not like very is you always consumer We're X bullish prospects startup. the while Having mean a these we Retailer very we're been that I have brand, of the like to And excited but great DKB DKB. some great. for it I to which the X it savory consumers base, on remind we to take shoppers takes take snack this are the very remain all has of items. items, guys a that. acceptance get expanding current because of much about consumption for to that. time do said business is things does

Stephen Robert Powers

reduction? little look it And to side I because CapEx like actually did it's want think is what you pass went Great. the on on. ask in true talk as for year. 'XX? reduction that we about of And Can planning I could, to bit. drove up should consider the the going is But we maybe It that that something sort that the Okay. be Steve, a -- efficiency? I'll is if does about capital ERP of kind just Or

R. Kinsey

ERP, main Steve. really spend for is pace the you're of to the them. to weren't kind necessarily is of get projects, change other mean, the And lot pushed, this year. right, we able it's it's I not bakery. got the mean Steve, of just Sure. reason just those there primarily I for a

roll XXXX. to So over will they

So you think consider next should about you that as year.

Operator

Truist next Bill Securities. comes Chappell from Our question with

William Chappell

business. Are different type anything year seeing [ into owning kind of kind the just ] about the the of bit little downs snackie or ups kind a store talk of for the sweet competitive, And on the is of and continued or pushing the of [ of to terms baked even Smucker's in you? you in declines. ] goods wanted just Hostess from brand stuff? kind category more more Or down this promotion Just

A. McMullian

Yes.

I us, me? Bill, think for it's generally more can hear you -- just

William Chappell

Yes.

A. McMullian

Okay. There the was just Yes, a sound it's of really the and interruption category. there. downs ups

back more consumers or attributable back think I to that on indulge. spend discretionary is pulling pulling

the some which typically You've even seen weakness very strong. snack has salty been category, in

books to think I it's But pocket consumers' more anything else. temporary. think it relates than do I

William Chappell

back. what this it seen dire long this how And do the to in It's Got a just you've be it. think -- up you just to past, crisis. Just on -- lasts? as seem pulling financial follow doesn't

you So do growth as Or back can we too into you to 'XX? move is it think get to tell? early just

A. McMullian

trends there. the a I before think strongest and be I it's would -- we crystal that this mean, and to have bit you'll inflationary mean, recall the on year, all of out a the goods categories healthier. ball, cycle. hit it despite I little category next don't but at think among baked to snacking reasonable point going start health gets The category the wellness normalize some stuff, I sweet Well, was things

to expect do return. I it So

we're on is just well out over I speaking that Philadelphia doesn't think got of bankruptcy. particularly for for brain, outside this a Tastykake that's items under category. excited but delivering you've [ play about super us, of brand ] high-quality that focused to specifically several consumer last great iconic the great We're winter us why brands. stronger quite years, as seen And Hostess the as And

Wonder brand the some category, promise. be we think a more So stronger we help on if the deliver us in the to pivoting of competitive those bit with quality can brands particularly

William Chappell

sorry, more. Got one just it. And

as level redline from roll well? seeing the competitor? primarily it smaller of in Or promotional regional the are the On is it business, largest you the coming players

A. McMullian

I Yes. activity it's our promotional And I fairly mean look, too. broad-based. increased, has mean,

Now is very we've pre-pandemic the But and of promotions, well still too. as levels. our intensity not increased below that high, we're

the So it's category. across

think lift little may in what different promotions. we may seeing However, that with one a good be our number some pretty those bit said. brands, And differentiated from have I are others than

Operator

Dickerson Our comes next Robert with from Jefferies. question

Robert Dickerson

just Maybe Great. quick housekeeping.

and some relative quarter. hurricane. then It at help QX, trends from sounds the to but the of remarks, maybe like a you end in I improved the the prepared said QX think in of little kind of continue a

you So curious, much quantify it's weeks? how sure want just the to do you saw you out how have of hurricane, trends of helped I'm not though those might a kind can I'm you couple of And been if even maybe only or then quantify that the quarter? coming think if

A. McMullian

Yes.

quarter. a but as but material, that course The stronger not the the continue. little So impact, didn't mean we an help. through weaker the had move was I third It that get bit in not category it some of It quarter. significant positive, we trends noted of did hurricanes particularly honestly. really Rob, in did

again, outperforming we're that think, flowers the thing to category. continues bit quarter soft, the emphasize important I is in while to the be specifically to the a category

of our if points -- share, points at We XX in were basis our category. largest fresh of And up basis you share, the both look units those, XX points. breads, gained in dollar packaged basis competitors among the some XX

category our a items of to at face So the soft a innovation, make bit a our in moment. differentiated even difference brands, our continue of the

Robert Dickerson

around the tortillas broadly more then subcategories bit store. buns permit speaking, bit overall just chicken the like a store you like of And bread comments the also just little could you that had of Great. of that's maybe and opine the Okay. I'm and a someone's curious, the on buying just perimeter if on better, made maybe helping certain maybe doing or

you're to mean, into throw using going I burger, a it you're chicken, I bond tortillas. a maybe guess

as when of other kind [ guess, sandwich there, bigger that, relative to diversify comment just just terms the of And So of areas, to maybe kind of to you ] of areas there's M&A always subcategories. like like switch out traditional a right? would actually bread you activities kind some like the you just little to of on say in then, tack a any kind Are those portfolio? of I that kind be in of that deal on

A. McMullian

In perimeter you mean? terms of the

Robert Dickerson

Yes.

a buy brand. tortillas big like Just

have Tortillas. we Now

We have [indiscernible].

A. McMullian

said Yes. goods. I mean, across look, we're we've looking baked before,

those that up away picks picks freezer takes up from of the that case, things. up that perimeter, picks center-store convenience, the So home and sorts up

Baked of a expanse So the category. which we're total Foods, across altogether massive looking is

In terms big of the Rob, single when we trends, the coming think deal, And back, would do was store of pandemic, the right? quarter of the to I if every happen? out reversion prepandemic, was harken the perimeter of expect the of one you get sort a you questions

actually parts. other piece much the of level than the plans arguably on world. of and the We've Canyons that's fight talked differentiation in that, the to seeing When pressures think more of that we their reversion and you of inflationary to I trying as the given just past, of Killer but impact in do shopping days quarters, patterns differentiated that the I haven't that to business rolls, expect budget. our that of of our meeting on portfolio [ buns but now in-home think a of many there stretch to to? least consumers We on you're obviously, trend the in that, kind back, how but gotten the do segment increase bit question what to impact world, now Breast trend mentioned, have tends the also the ] that's less food traditional you the terms the

matter, this beat and overall. differentiation drum continue and So that's to what's business fueling that we our innovation

Robert Dickerson

one, Okay. last then Great. And quick just one sense. a maybe Makes one.

still guide least for little for think of bit a like kind about margin of be at kind the maybe implied seems the at we around of midpoint, EBITDA. QX, it could there If improvement. Just year-over-year what's

of kind So in here. of a questions couple

promotional backdrop. -- what is and a still to of higher which what of like the is and lower could kind little like I kind end range, price for complicated kind of wide, at like part it thinking this all guess, for just kind playing curious QX, gets the margin maybe you And you the But the just kind Just then about of seems end? that get right, guide also environment safe of quarters you're in of the how piece? fair, of given what implied

A. McMullian

Yes.

on it's we quarter, don't think conservative have a you Look, I you fourth better -- why I hand, visibility. just one we're the that outlook. continued overall, and think into the get

our savings to bread offsetting But and cautious been grow remain we on outlook. think Rob, increased units. execution fantastic happened. could things have year that roll have I execution just to great when continuing we're the visibility, some off those that we guidance, but the program, including do things promotional issued marketplace year that activity trying but of noting We the given the impact our on just started the has that in

weakness on The covered doing the home from drag the has due the just business. of packet we really honestly, in-home And on those which that been away fresh bit bread with to we've QSR the the in business, business weaker primarily and issue is anticipated, the business. to pricing. already -- than the a elevated It's Cape other mean there's great. business The no I really of pieces. there's just part is shift

end strong get what and get a performance the in of you to better of So could higher cake your the bit range, continued to performance the question, upper the that core a range. could business out end QSR you the and of

Operator

Stephens. Salera Jim from comes question next with Our

James Salera

of maybe the other break softness in And in the known. of headwinds out Can food in Because to business third was well much quarter. still QSR I the we you to some volume how foodservice you service headwind as Ryals, dig and of on relative about those some down exits? a category. I wanted have the think other talked certainly bit little the the a to

any helpful. how So piece would would down? label that been strip be other well maybe the have as private category volume much those if on we out, in your And just color

A. McMullian

Yes.

were of if we of I strategic the the in So mid-single would dynamics, say you out of is cycling it exits digits strategic kind rest will. of category the from exits quarter. the channel third finishing sort

profitability also than the the that that losses. steps would I the overcame that pricing terms in But say Jim. factors, of taken improve we've external of mostly business to So more volume

away. to that's an So important note take

James Salera

to on But to volume? break label piece safe private out out, private For guys component the say break other competitive assume segment sure. it that And if realize then that -- anymore. I I for reasons, the positive safe and so it don't is of is you that label is

A. McMullian

in has look you Actually, we private just share The volume can is label, price and label more. label pricing going label down no. was the private private talk bit gotten bit losing actually, bit, little a well. gaps a -- has syndicated data, narrowed label if Private a is and at as Brandon as increased up our the have private and promoted Jim, little

bit So more now to you're starting back shift branded. to see a that

James Salera

some customers that you faster of ramp a a can new think we kind business possible Okay. there remarks, look new in you that the Great. on us up And incremental into have mentioned what is it of faster slower? of -- give if curious benefit slower your faster I it's that ramp or driver insight might anything some we, wins some prepared with then also is on could if scaling see at or just be outside and kind scaling would

A. McMullian

Yes.

of been So pretty captured. the the already for new business remainder the year much has

captured. for but been have for get gains year more expected have incremental we'll obviously, Now XXXX to that this we the

to much get picture come but you to well in end clearer went February, and a to just back off we'll we good start. we the that year how have when So on a we're of the

some is branded to up a well, with, going more we're Service good. you will. that reaching our that ramping if for we consumers. of these be benefit more needed great have business It's strategic And customers added nice this to as is with

Operator

Mitchell Company. with Pinheiro from comes Our question next Sturdivant &

Mitchell Pinheiro

Yes.

gains, gains do our competitors, when broad-based? I we're little you it guess, picked up I obviously fresh where losing Is of at private label you Is So who's -- are share? like major being from, bit bread think? a expense, guess national your but regionals, your category the it

A. McMullian

regions, lift. quarter. [ some pretty actually, but of like look regionals they the doing label. They private good getting some are well, for the know example, also They some they're other at they're ], had like of bit they more, are and are Pepper coming coming although it from a promoting from looking I syndicated, a looks

around a the from it's story. but not mean, I that's So coming new category, really

we from a in focus away the business leader bringing we that to to about -- talk competitors consumers, as pulling other to on innovation Mitch, products category mean due innovation. continue the and being that we're I in differentiated

Mitchell Pinheiro

you I mean, Or of more talk a winning geographic be coming to in like than about bit can you a happen that any west? east is market that? or dynamic little

A. McMullian

Yes, sure.

it's frankly, been Southeast. So in it's had in, been of in Northeast, bit -- et actually more stronger newer Midwest, the we've has where been pressure, recently, markets, the Mitch share a little the cetera, of

to of tends market. software. steps quite X erosion obviously, share But We're most a ago. were and we aware our there. mature activity of it. kind But still soft we're it taking a really it's bit So on years I'm we've on higher more variety. bit seen harping There be to than counteract little competitive of

are in the differences are we in there geographies, newer we're most the the -- where gaining geography. And So areas those are share.

Mitchell Pinheiro

of it's near-term you so mean -- in And an out wouldn't very there rate -- those geographies. any what's I that some obstacles there are be of to new what -- important grow seeing at that share in newer obviously What's Are right you're those geographies? maybe your kind now? accelerated challenge the growing why

A. McMullian

we you're the gist sure new get really market. those question of geographies. Obviously, in to not I'm your because are the new growing I

But awareness we've We're there. grow and and get got been get we the Northeast Midwest. and a those repeat and consumer share to You've to to talking trial all newer things. continue while, for the about

the the into one retailers launched of just major spring. we in So Midwest

feel can we there's share. -- grow #X those But activity. with really our in very very we confident but the some There just strength we're it getting there. big no, consistently are markets, competitors started So of brands, competitive that I mean, obviously,

Mitchell Pinheiro

gains. a quicker I was guess for share looking little obviously, I No, Okay. more

you are exactly You were where I -- today. don't know

X Northeast, XX% something at I'm That's I that gains, was very, not ago. a a in But perhaps say, years growing all. an obviously, stopping is the I were there share know share maybe hypercompetitive today. just thought And a from sure business. rate. where you even quicker it's You

A. McMullian

I this time specific. it just think is And nothing on head. you mean, I build competitive It's the takes hit No, share. to right a category. it

become of we well continue time point, specifically, that Northeast, a category. there. we're that constraint, ahead to capacity grow. from it's where don't in but get there, Now -- situation penetrated a enough of some we too. fully planning capacity get at to that, don't But takes up to have can so lot aside It just it's and The a there's co-ops competitive independents a

So yes, just things that. like

Mitchell Pinheiro

Okay.

when haven't on increase provide -- really your And seem this Okay. any was OEE or but update would capacity that fixed Can years be utilization. there back significant a the I And then are update at of that. you the lately, your used leverage margin I in the you curious mid-XXs. any you I any looked Where have detail to was there? of to guess there a was couple you is -- -- you the cost if as capacity. because ago story, part could

A. McMullian

Sure.

it OEE been. than we're more to depends call gets So when quite higher on little But than full. now a is that. obviously so running the Obviously, in our when summer XX%. has it's right, -- it bit you you're we be better it it, bit busy want XX%, a look, in But pressure it

margin line. performance. we're made the in great mean, of the seeing gross And I that strides. we've a that's So bottom component some

operating see to effectively good more us there. it's So

Mitchell Pinheiro

And so...

A. McMullian

Sorry.

business, margin we very of overhead do but that business strategic as certainly us But little because with line right the are leave to bottom thing going does that we've direct refill to term we exits, fixed coverage, terms about a a that jettisoned the poor talked long volume of some had have also impact. is we it bit In before overhead higher-margin stranded. with

Mitchell Pinheiro

guidance, is to -- XX% not out of that mean, know progress And year? heels margin And to to EBITDA the lower the there then see that is guidance, we'd but next to range ready XX% EBITDA we kind kind talk range. can you year? you're I want long-term it but get Okay. ready have lower growth end to there end I to that provide not call your nipping to you're have that to know that sort on on be of the Or going call are still consider? I too 'XX next anything that of we're in out the early you of of

A. McMullian

mean, in reach. within without where including run 'XX long-term but I obviously yes, frankly, talk And yet, accretive algorithm you that's see think, there. certainly, term, can we're not XX% the reach, can to get talk as long And So focused we we you M&A, we we're which And XX% to Mitch. is it's ready out, it well. can on think if we

branded savings the low the about between feel we a optimization, to accretive in business, I margin So that shown OE, low-margin talked of the in of We level. lot all et of shift the network up these the think time, M&A. we've mention initiatives, that things that jettisoning to of we growth the the get EBITDA can portfolio, Not cleaning our over our quite business, cetera. teens factor confident portfolio

Operator

Our BNP next Gumport Paribas. Max from question comes with

Max Andrew Gumport

me time, U.S. in expected ramp-up to the that seems this XXXX? But largely which in financial as these second the given it's You're point you a consumer of a be also see spread be you at persist competitive is challenged observing meaningful to an expecting noted category pressure. clearly the portion driven should I'm by category temporary, activity of store. we headwind reasonable curious half, shift feeling in through pressures the to as to And this consumers increasingly continue and perimeter

A. McMullian

be in our they've [indiscernible], weakness, all Yes, of sure. to that proven feels I crystal consumption times but things bit about many, When a ball, we've Max, the talked history. through shift, little trade there's mean, been consumer no down, again, we the before many always but this temporary. patterns

control. So we we're working that hard on can things the

And well. quality to frankly, the line quite we be think of and up our that showing that that are as as . sure can make that delivering possibly we performance market I highest things the performance innovate. in nicely are we our continue to we're continue share in and efficient those We consumers as bottom

Max Andrew Gumport

lot And for most what Dave's an slowdown recent the data category of I'm Scana that past ], flattish, I been and it's could growth curious engine Killer pressure. classic you're But sales think, on within you the the it slightly that again bread not had realize be Great. at business, update then pointed you're for feeling on the the it in terms. [ read years. seeing just seeing maybe Are even about and in concerned can whether offering. for over become the just the or I it I'll by bread a Bread talking just there. that several in down leave dollar category trends

A. McMullian

you both units, Max. It not our still Dave's we too talk seasonality. not positive. about match is Sequentially, note quarter, terms always yours. this the there's Thanks, with but your And will. and We from up is and sure. if dollars data down it's down. Yes, in can saw offline last up. data -- of does it's

Dave's look you in back still our year, and little get the bit back of towards go you is units. category, dollars is there of If seasonality and the growing a as half but

Operator

any McMullian remarks. now closing to back turn over like I would Ryals for call to the

A. McMullian

look to next forward thanks, and Everybody, care. joining with taking everybody, you company, appreciate speaking we Josh, Okay. certainly Thanks, questions. our We your us time interest take for today and and quarter. in for

Operator

for participation. conference. concludes This you. Thank you Thank your the

disconnect. now may You

Flowers Foods (FLO) 8 Nov 242024 Q3 Earnings call transcript